Quality standards

There are different quality standards which aim to define the requirements and specifications which corporate processes should meet in order to ensure that the products and services of the companies fulfil the needs of their users. Some quality standards are non-industry specific (ISO 9000) and some are created specifically for a particular industry. Some of the industry specific standards include, but are not limited to:

• ISO/TS16949 for Automotive industry

• ISO 13485 Medical device manufacturers

• AS9100 for Aerospace industry

• API for oil and gas industry

This chapter looks more profoundly at how ISO 9000 standard as the most widely adapted quality standards can be used as a tool to improve the quality in the supply chain. As mentioned earlier, there are also other quality standards that can be used in different companies, but especially ISO 9001 is the most well-known standard that is directed towards quality. It is even thought as something that can be considered mandatory to be able to operate in some industries (Bendell, 2006; Sroufe and Curkovic, 2008). The first standard was published in 1986 and now companies are using the fifth edition of the standard (SFS, 2018). There are over one million companies in over 170 countries which have an ISO 9001 certificate which is the one that you can be certified in out of the ISO 9000 family (ISO, 2018). The ISO 9000 is divided into four parts:

• ISO 9000:2015 Quality Management System. Fundamentals and vocabulary

• ISO 9001:2015 Quality Management System. Requirements

28

• ISO 9004:2018 Quality management. Quality of an organization. Guidance to achieve sustained success

• ISO 19011: 2018 Guidelines for auditing management systems (SFS, 2018) In ISO quality management there are seven core principles: customer focus, leadership, engagement of people, process approach, improvement, evidence-based decision making and relationship management. ISO states that the newest version of the ISO 9001:2015 addresses supply chain management more effectively than the previous ones may have done. (ISO, 2018)

The opinions of the effectiveness of the ISO 9000 on a particular company’s performance are highly divided in research. ISO 9000 standard is seen to belong best into traditional manufacturing companies (Johannsen, 1995). The standard is created by a small technical board which consists mostly of experts from manufacturing, technology and business improvement. Wayhan, Kirche and Khumawala (2002) also want to remind that there are costs related to achieving an ISO 9001 certificate that should not be forgotten when judging the effectiveness of it. Sometimes these costs are just seen as a cost of doing business when suppliers are expected to have the certificate (Sroufe and Curkovic, 2008). One of the down sides of ISO 9000 is that it requires a lot of documentation (Tsiotras and Gotsamani, 1996; Karthi et al., 2012; Sroufe and Curkovic, 2008). This can also be sees as a positive aspect since it allows the information to be communicated to the whole organisation (Zuckerman, 1996). It can also be seen as a record of lessons learned (Sroufe and Curkovic, 2008).

Even though ISO states that the focus is on process improvement and continuous improvement there is a fear that it is missing the point (Vloeberghs and Bellens, 1996). It is seen to concentrate more on achieving the certificate than on how to improve the processes inside a company. There are also multiple studies that think that the standard does not focus enough on the improvement of the management processes (Chatterjee and Ylimaz 1993; Karon 1996). On the other hand, Brecka (1994) found that companies that have had the certification for over five years have achieved more benefits than companies which have just received the certification. Another positive effect which ISO

29 9001 certification has on quality is that it requires top management to be actively enforcing quality practises (Sroufe and Curkovic, 2008). From the research it is clear to see that if a company decides to invest into a certification it is a long-term commitment and the benefits might not come immediately and they require a lot of work from the whole organisation.

ISO 9001 research is placed on the intra-organizational side of the framework, and includes research examining internal work practices and processes that are influenced externally by suppliers or customers but does not concentrate on integrative processes or strategies with these suppliers or customers (Johnson, 2002; Terziovski et al., 2003).

The standard can also be used as a method to make a supplier selection (Lee, Lee and Jeong, 2003)

Although ISO 9001 does not explicitly describe the requirements of SCM, it improves SCM through the development of a better supply management system. It requires that the supplier’s products meet the specifications of the company. Therefore, supplier evaluation and selection must be based on supplier’s capability, including its quality system and ability to meet the buyer’s quality assurance requirements. (Yeung, 2008) It can also be considered relevant to supply chain quality because the standard emphasises the continuous improvement of business processes while interacting with suppliers and customers. (Robinson and Malhotra, 2004)

Yeung (2008) believes that SCM can be improved by implementing QM but it is not dependent on implementation of ISO 9000. The standard is more used to create a tighter control on supplier selection and more formal procedure for inspecting supplier products.

It is also a preferred quality management method of the operation management (Foster et al. 2011). ISO 9001 states that there needs to be a precise and objective selection, that evaluations are established and recorded, and that the products which are purchased, are inspected and verified. However, Yeung (2008) points out that these are just the basic requirements in any purchasing and in so does not cover the whole supply chain. Sroufe and Curkovic (2008) contradict this by saying that by having a certificate a company is allowed to have better understanding of processes, lower costs and improve performance.

30 Yeung (2008) found that ISO 9000 has little impact on the strategic improvement of quality in the SC. It can be thought that just getting certified for ISO 9001 does not automatically mean that it will improve the quality in the supply chain. However, if a company is proactive towards quality and standards it will have a positive impact on the SCQM (Sroufe and Curkovic, 2008). Having multiple ISO 9001 certificate holders in the supply chain has a more positive effect on company’s profit than just the purchasing organisation having the certificate or just some of the suppliers in the supply chain (Diaye Greenan and Pekovic, 2014).